Feds: Pharmacy owner charged in prescription drug fraud scheme

A Port Washington man who runs two New York City pharmacies sold secondhand prescription drugs as "factory fresh" from legitimate suppliers in a scam to defraud government health programs out of millions of dollars, federal authorities said Friday.

Purna Chandra Aramalla, 65, has been held on a $2 million bond since his arraignment Tuesday on one count of conspiracy to commit health care fraud...

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A Port Washington man who runs two New York City pharmacies sold secondhand prescription drugs as "factory fresh" from legitimate suppliers in a scam to defraud government health programs out of millions of dollars, federal authorities said Friday.

Purna Chandra Aramalla, 65, has been held on a $2 million bond since his arraignment Tuesday on one count of conspiracy to commit health care fraud and wire fraud and one count of money laundering, said the U.S. attorney in Manhattan and the FBI. He faces up to 20 years on each count.

Aramalla would order certain expensive, brand-name drugs, such as HIV medicines, from a street supplier who'd get them from patients who didn't want to take their medicine, federal officials said.

He, his supplier or another pharmacist working for him would use lighter fluid to dissolve the original labels, authorities said, and the drugs would be repackaged to look new, as if they came from legitimate suppliers, officials said.

Having bought the drugs cheap, he'd sell them for a profit at the pharmacy he owned, A Fair Deal Pharmacy in Corona, Queens, and at Quality Health Drug in the Bronx, which he ran for a relative, investigators said.

At the same time, Aramalla would also get reimbursements from Medicaid and Medicare on some of the prescriptions filled, authorities said. From October 2010 to August 2012, for example, he ordered about $1.7 million of certain brand-name HIV drugs from legitimate wholesalers but got about $4.3 million in Medicaid and Medicare reimbursements -- an indication he had illegally charged the government programs for secondhand drugs, officials said.

"The illegal diversion of prescription medications threatens the health of those induced to sell their medication rather than take it," said U.S. Attorney Preet Bharara. "It threatens the health of those who unwittingly purchase the repackaged drugs believing them to be factory fresh."

Aramalla's attorney, Catherine Foti in Manhattan, said she has not seen the evidence in the case, including alleged phone conversations taped by the FBI.

Authorities said they suspect Aramalla might have been selling secondhand prescription drugs and defrauding the government health care programs for the poor as early as 2009.

With the permission of Aramalla's top street supplier, FBI investigators taped the supplier's phone conversations with Aramalla, who could be heard in one call say that he'd take "whatever" the supplier could get, according to the FBI complaint.

The pharmacy owner would also buy MetroCards in bulk -- $2 million between 2010 and March 2013 -- and sell them to generate cash, which he used to buy unfilled prescriptions from customers, authorities said. He'd bill Medicaid or Medicare for reimbursements on those prescriptions, then share the proceeds with the customers, dubbing the payments "loans," one of his pharmacists told agents, according to court papers.

Diverted drugs are dangerous, the court complaint said, because they may have been stored under bad conditions or may have expired.